In a research paper published today, the Centre for Economics and Business Research (CEBR) claims that keeping “the euro alive will require cuts in living standards greater than the UK faced in the Second World War” for weaker eurozone members.

“There is no modern history of falling living standards in peacetime on the scale necessary to keep the euro in its current form. This is why I think there is at best a one-in-five chance that the euro will survive as it is,” Douglas McWilliams, CEBR chief executive, said.

His warning came as the Ernst & Young eurozone forecast raised the prospect of a severe recession in the eurozone to one-in-10. Its “central” prediction is for GDP to grow 1.4pc next year, against 1.7pc in 2010, and an average of 1.9pc for the following three years. Following the resurgence of sovereign debt fears, though, there are now “greater downside risks”.